Updated: Oct 23, 2022
As a construction specialist, you may assume that you are familiar with the terms "bookkeeping" and "accounting." Do you actually know them, though? Bookkeeping vs accounting is often used interchangeably, which is apparent to outsiders. However, it's important to keep in mind that bookkeeping and accounting differ in a few key ways.
To gain a clear financial picture, construction owners must separate the two. Bookkeepers and accountants support your business, yet, at different financial stages. Let's examine these 2 terms in more detail and see how hiring an accountant and bookkeeper can help your construction company.
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What is Construction Bookkeeping?
Bookkeeping is the process of keeping accurate records of every day's transactions. It is indeed a key part of gathering the financial information needed to run a successful business.
Simply put, bookkeeping is more transactional and administrative, focusing on recording financial transactions. Bookkeeping sets a standard for an accurate record of where the transaction occurs. These transactional documents can include payments, invoices, payrolls, and other reports.
Simply said but not easily achieved. Bookkeeping has become important in the construction industry because of its decentralized nature. No two projects are alike. It costs money to move people and equipment from one place to another. The more projects you have, the more crucial to have your bookkeeping organized.
What Does a Construction Bookkeeper Do?
A construction bookkeeper will track day-to-day expenses and manage general ledgers.
Common Bookkeeping Tasks Include
Recording daily transactions
Posting debits and credits
Creating financial statements (balance sheet, cash flow statement, and income statement)
Maintaining general ledgers, and charts of accounts.
Make sure that the books are accurate and prepared for tax season by creating a trial balance
While there are many valuable tips on how to perform bookkeeping properly, it may be wise for your construction firm to hire a seasonal and professional bookkeeper. Since CCA has been doing bookkeeping for the construction industry for 15 years, give us a call so we can take care of the work for you.
How is Construction Bookkeeper Different?
Construction bookkeepers differ from regular bookkeepers in several ways:
Every project is unique, so the costs of materials, labor, and equipment, will be different. It is the responsibility of a construction bookkeeper to accurately keep track of all these costs.
Moreover, as an outdoor-based industry, weather and regulations can delay project completion. The cost of equipment, labor, and materials may fluctuate rapidly. It's a construction bookkeeper's job to record what's changed to ensure the project's profitability.
With so many moving parts, it is easy for records to be forgotten, lost, or not put in the books at the right time. A construction company may be affected by any of these over the long term. All these factors make construction bookkeepers irreplaceable to have a successful business.
Construction bookkeepers free up your time. You can be at ease knowing that you have more precise financial data and reports to determine your revenue with each project you work on. Having your books kept up to date by a bookkeeper will also help you stay prepared for tax season all year long. With the help of CCA's services, keeping your books and money in order is a breeze.
What is Construction Accounting?
Accounting uses documented financial data to create financial projections. This process summarizes, analyzes, and interprets financial data. Accounting also involves reporting these results to tax collectors and government controllers. It tells the financial story of your business, like if you're making money or losing money and what parts of your business are the most profitable.
Keep in mind that bookkeeping is the foundation of accounting. Without the bookkeeping process, accounting would not be possible. Because the accountant uses bookkeeper data to prepare financial statements and reports
What Does a Construction Accountant Do?
Construction accountants focus on taxation and analysis. They evaluate the finances and make wise business decisions using the records provided by bookkeepers. They give business owners financial insights and a summary of the company's financial health.
Common Accounting Tasks Include
Preparing to adjust entries, which are for expenses that have happened but aren't yet in the books.
Reviewing company financial statements
Analyzing costs of operations
Completing income tax returns
Advice the business owner in financial decisions
How is a Construction Accountant Different?
Construction accounting is not the same as regular business accounting. Regular accounting deals with usual accounts payable, accounts receivable, and payroll transactions. Construction companies must also deal with retention, job costing, change orders, and other tasks. These extra features distinguish construction accounting and need special procedures.
Bookkeeping vs Accounting: Key Differences
Bookkeeping and accounting are both very important to the success of a construction business. However, accounting can't be done without maintaining good bookkeeping. So, if you aren't good with numbers and need help with your construction company's books, look into hiring a professional bookkeeper.
Should You Hire an Accountant or Bookkeeper?
When it comes to hiring an accountant or bookkeeper, the answer depends on what kind of help you need. Bookkeepers manage financial records, while accountants offer advice.
Working with both an accountant and a bookkeeper is common for businesses, particularly in the construction industry. Regardless of your decision, hiring a bookkeeper or accountant is the best way to manage growth.
Consider a somewhat reliable and well-known bookkeeping firm if you need help with your bookkeeping vs accounting. CCA also offers dedicated bookkeepers with expertise in the construction industry. We'll take care of your bookkeeping so you can spend more time on your building. If you're in need of assistance, please don't hesitate to contact us so that we can provide you with services that are specifically designed to meet your requirements.